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Sticky short-run prices and vertical pricing: Evidence from the market for iceberg lettuce

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  • Nicholas J. Powers

    (3269 Kenmore Road, Shaker Heights, OH 44122-3456)

Abstract

Wholesale prices of iceberg lettuce move in accord with free-on-board shipping point (FOB) price changes, uniformly adjusting in 1 week to rising and falling FOB prices. Retail prices, by contrast, adjust more slowly to FOB and wholesale price changes, and they respond slightly more to wholesale price increases than to decreases. Moreover, FOB and wholesale price changes often partially „pass through” retail prices, suggesting retailers stabilize their short-run prices by absorbing FOB and wholesale price rises and not passing along these price declines. Packer-shipper efforts to stabilize weekly FOB prices for 1 month reduces estimated averages of the retail price and retail-FOB price spread in 11 of 12 cities. © 1995 by John Wiley & Sons, Inc.

Suggested Citation

  • Nicholas J. Powers, 1995. "Sticky short-run prices and vertical pricing: Evidence from the market for iceberg lettuce," Agribusiness, John Wiley & Sons, Ltd., vol. 11(1), pages 57-75.
    • Handle: RePEc:wly:agribz:v:11:y:1995:i:1:p:57-75
    DOI: 10.1002/1520-6297(199501/02)11:1<57::AID-AGR2720110107>3.0.CO;2-9
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    References listed on IDEAS

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    1. Blinder, Alan S, 1982. "Inventories and Sticky Prices: More on the Microfoundations of Macroeconomics," American Economic Review, American Economic Association, vol. 72(3), pages 334-348, June.
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    1. von Cramon-Taubadel, Stephan & Loy, Jens-Peter & Meyer, Jochen, 2003. "The Impact Of Data Aggregation On The Measurement Of Vertical Price Transmission: Evidence From German Food Prices," 2003 Annual meeting, July 27-30, Montreal, Canada 21987, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Richards, Timothy J. & Patterson, Paul M., 2004. "Causes of retail price fixity: an empirical analysis," Journal of Economics and Business, Elsevier, vol. 56(2), pages 117-136.
    3. Guojun He & Jeffrey T. LaFrance & Jeffrey M. Perloff & Richard Volpe, 2024. "How do Everyday-Low-Price Supermarkets Adjust Their Prices?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(1), pages 117-146, February.
    4. Glauben, Thomas & Loy, Jens-Peter & Meyer, Jochen, 2004. "Does Money Illusion Matter? The Impact Of Euro On The Vertical Transmission Of Food Price In Germany," 2004 Annual meeting, August 1-4, Denver, CO 20104, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Patterson, Paul M. & Richards, Timothy J., 2001. "Retail Contracting And Grower Prices," 2001 Annual meeting, August 5-8, Chicago, IL 20534, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Giliola Frey & Matteo Manera, 2007. "Econometric Models Of Asymmetric Price Transmission," Journal of Economic Surveys, Wiley Blackwell, vol. 21(2), pages 349-415, April.
    7. Richards, Timothy J. & Patterson, Paul M., 2000. "New Varieties And The Returns To Commodity Promotion: The Case Of Fuji Apples," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(1), pages 1-14, April.
    8. Stephan von Cramon-Taubadel & Jens-Peter Loy & Jochen Meyer, 2006. "The impact of cross-sectional data aggregation on the measurement of vertical price transmission: An experiment with German food prices," Agribusiness, John Wiley & Sons, Ltd., vol. 22(4), pages 505-522.
    9. Balaguer, Jacint & Ripollés, Jordi, 2016. "Asymmetric fuel price responses under heterogeneity," Energy Economics, Elsevier, vol. 54(C), pages 281-290.
    10. Timothy Richards, 2007. "A nested logit model of strategic promotion," Quantitative Marketing and Economics (QME), Springer, vol. 5(1), pages 63-91, March.
    11. Hassan, Daniel & Simioni, Michel, 2002. "Price Linkage and Transmission between Shippers and Retailers in the French Fresh Vegetable Channel," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24794, European Association of Agricultural Economists.
    12. Said Tifaoui & Stephan Cramon‐Taubadel, 2017. "Temporary Sales Prices and Asymmetric Price Transmission," Agribusiness, John Wiley & Sons, Ltd., vol. 33(1), pages 85-97, January.
    13. Tifaoui, Said & Cramon-Taubadel, Stephan von, 2015. "Temporary sales prices and findings of asymmetric vertical price transmission in scanner data," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204295, Agricultural Economics Society.
    14. Santeramo, Fabio Gaetano & von Cramon-Taubadel, Stephan, 2016. "On perishability and Vertical Price Transmission: empirical evidences from Italy," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(2), September.
    15. Richards, Timothy J. & Patterson, Paul M. & van Ispelen, Pieter, 1998. "Modeling Fresh Tomato Marketing Margins: Econometrics And Neural Networks," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(2), pages 1-14, October.
    16. Glauben, Thomas & Loy, Jens-Peter & Meyer, Jochen, 2005. "The Impact of Euro Introduction on the Vertical Price Transmission in the German Food Market - Does Money Illusion Matter?," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24634, European Association of Agricultural Economists.
    17. Richards, Timothy J. & Patterson, Paul M., 1998. "New Varieties and the Returns to Commodity Promotion: Washington Fuji Apples," Working Papers 28541, Arizona State University, Morrison School of Agribusiness and Resource Management.

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